Is Outsourcing A Dirty Word?

The word “outsourcing” conjures up images of call centres in the Philippines, factories in China or Mexico, and clothes being made in Bangladesh or Taiwan. But is this a fair view of outsourcing? And what does it really mean to small and medium Australian businesses?

What Is Outsourcing?

The reduction of trade barriers in the 1970s and 1980s made offshore outsourcing (often called “offshoring”) much easier. Manufacturing and call centre jobs were relocated overseas to take advantage of lower wages, resulting in substantial alarm across the media. Despite this, offshore outsourcing has consistently been shown to be beneficial for the Australian labour force. An Australian Parliamentary research paper described Australia as a major beneficiary of offshoring thanks to a net 2.2 percent increase in employment despite substantial exposure to offshoring. When people talk about outsourcing in a general context, this is the sort of outsourcing they typically think of.

But that’s not the kind of outsourcing that we’re talking about.

Outsourcing simply refers to any business process that is tendered to another company.

Simple, isn’t it. This means that virtually every Australian company outsources, whether it’s accounting and payroll, web design, payment solutions, or IT solutions. This is simply because outsourcing allows the business to focus on what it does best without worrying about tedious backend tasks.

And nowhere is this more important for small and medium enterprises than for IT.

Why IT Should Be Outsourced

While big firms can afford large IT departments, small and medium enterprises generally cannot, and without managed IT services, they are at risk of major breaches of customer data, IT inefficiencies and costly IT staffing. Three quarters of websites have vulnerabilities, and ransomware attacks increased by 35 percent in 2015. In addition, there were nearly 500 million reported data breaches in 2015, and it’s likely that there were many more as companies seek to downplay major issues with their systems.

In December 2016, approximately 1 in 95 emails sent to small and medium businesses contained malware. This is worrying particularly given the trend towards ransomware — software that encrypts your hard drive and only unlocks it when a code is inserted. Typically, you have to pay a substantial sum to obtain the release code and hope that the attackers will actually release it. Instead, our better solution is to ensure that your data is secure through backups and that strict user policies and procedures are implemented. In addition, a valuable spread of technologies, including Webroot and Cisco Umbrella, and powerful IT policies can proactively eliminate threats before they even arise.

Most small and medium businesses simply do not have the resources to cope with sustained attacks and the fallout that can occur should an attack be successful.

This is why small and medium businesses need advanced IT infrastructures so that they can handle a wide range of threats and attacks and have the knowledge available to deal with them. In addition, should something go wrong, a managed IT services could help to recover data and secure the system again rapidly.

Similarly, it’s better for customers and employees, as you reduce the risk of downtime. This means that your IT systems stay up so that anyone can access them when needed. It’s hard to provide this when you are a small business, as it needs multiple setups and complex infrastructure. As part of a managed IT service that has multiple servers, however, it’s easy to create.

IT Can Be Convenient

Growth is a key aspect to any business. At some point, if your business is one of the 40 percent that remains trading after three years, you want to think about expanding so that you can more easily absorb losses, take slightly bigger risks and make more money. This might involve opening another shop, or it could mean moving to bigger premises so that you can handle more clients and staff. Either way, a managed IT support can help you easily transition to your new circumstances without having to rehire, retrain and re-equip your staff. Even better, you do not have to move servers and experience substantial downtime as you do so. This is part of the flexibility offered by cloud delivery models.

Similarly, outsourcing in general is a great way to account for sudden changes in circumstances, as you can increase or decrease the services that you need without having to hire or fire IT support staff. This applies equally to accounting, payroll, your supply chain and even building services, depending on how your business operates.

Better Strategising

All businesses should have a strategic plan, yet one of the most common reasons why small businesses fail is because they lack clear direction and practical solutions. These account for around 44 percent of business failures within the first three years, according to the Australian Securities and Investment Commission. Around 40 percent failed to invest and utilise cash appropriately, typically due to not having enough capital, and 33 percent suffered serious trading losses.

Having a managed IT support means that you have a completely managed strategy for your business, and that’s a key part of your business plan delivered. In addition, this ensures that you are spending your money appropriately and have advice available when needed. Indeed, there is no substitute for having someone sit down with you and talk you through the solutions to various pain points from an IT perspective and what they cost, simply because most case studies online do not deal with your specific circumstances. Accurate and useful information can be hard to come by when browsing the internet.

What Does IT Outsourcing Cover?

Depending on your service provider, managed IT services can be provided in these areas.

Software & Licensing

A managed IT solution might include obtaining and supplying appropriate licenses for wide range of programs that you need, such as Office 365 and Microsoft Exchange. In some cases, this might be linked with other departments, such as payroll and admin. Depending on your needs, it may involve maintaining those programs and permitting access to selected employees and managing and updating software throughout the business, often through a cloud delivery model.

IT Support

Most forms of admin involve modifying users and ensuring that users can use the system in an appropriate way that maximises their job effectiveness. In addition, it ensures that old users are removed and that new users are on it. It might consider what your current capabilities are and indicate whether you are utilising the network fully or if you might need an upgrade, whether regarding a centralised server or regarding the equipment that your employees use. Similarly, a managed solution could provide reliable level one and two support 24/7, a valuable requirement for a small business.

Backup Management & Proactive Maintenance

Generally, data handling involves securing personal data and ensuring that your customers’ data is handled appropriately. Data backups often done automatically and backed up on a remote server so that should the worst happen, your computer network can be recovered, even if it’s destroyed in an unexpected incident.

Monitoring and Security

Monitoring can involve watching and waiting for issues to arise, but a fully integrated managed IT service deals with problems proactively. Typically, if a server goes down, that is lost business time, but if you have time to migrate the server before it becomes an issue, all your data is preserved. Active monitoring and maintenance reduces data loss and downtime as a result.

Security also monitors the network, except it looks for issues being caused by external parties. Intrusion detection systems highlight when an issue arises, such as a hacking attempt, and indicate what sort of attempt it is. A firewall stops the attack before it can go any further into the system. Other network applications may record information and actively prevent intrusions, stopping problems before they arise.

All of these systems work in harmony to ensure the network stays working throughout the day and to allow appropriate management of the entire IT arm of the business.

The Key Takeaway

Outsourcing, despite its somewhat chequered reputation, is not a dirty word. It is widely used across the nation, creating practical solutions for small and medium enterprises — and even big business — so that they can expand and grow. It also allows businesses to access advanced options that would otherwise be cost prohibitive to handle in-house. Ultimately, outsourcing is here to stay and provide numerous opportunities for small businesses to remain operating cost-effectively and stay secure in the digital age.